On 15 April 2014, the European Parliament adopted a Regulation on securities settlement and central securities depositories (CSDs).
The main objectives of the CSD Regulation are to:
- Increase the safety of settlements, in particular for cross-border transactions, by ensuring that buyers and sellers receive their securities and money on time and without risks
- Increase the efficiency of settlements, in particular for cross-border transactions, by introducing a true internal market for the operations of national CSDs
- Increase the safety of CSDs by applying high prudential requirements in line with international standards
The CSD Regulation provides for the following:
- Shorter settlement periods –a maximum of two days after the trading day (T+2)
- Deterrent settlement discipline measures (mandatory cash penalties and ‘buy-ins’ for settlement fails)
- Strict access rights to CSD services
- Increased prudential and supervisory requirements for CSDs and other institutions providing banking services ancillary to securities settlement
The adoption of the CSD Regulation must now be formally approved by the Council. The publication of the new rules in the Official Journal of the European Union is expected in the third quarter of 2014.
Contributed by Nicola Doran
